VC Investment in Healthcare

There’s a real change happening right now in the venture capital healthcare investment world. In a recent article on NPR they highlight one piece of the change that’s happening with VC investment in healthcare:

The share of venture dollars flowing to seed and early-stage investments in biotechnology and medical devices has plummeted since 2007, when investors pumped $3.6 billion into 332 deals in which a price was disclosed, according to data compiled for Kaiser Health News by FactSet Research Systems. Overall venture investing declined by nearly one-third as the economic recession set in.

Many might look at this and say that this is a bad thing for healthcare. I think this this is a good thing for healthcare. One reason why is described in the same article:

“If you come in with [a device] that’s 10 percent better and twice as expensive, it’s hard to get anyone to care,” said Bryan Roberts, a Palo Alto, Calif.-based venture capitalist at Venrock, a Silicon Valley company that invests in firms working on health services, medical devices and drugs.

I think it’s healthy that we’re no longer investing twice as much money in something that delivers only partially better care. Sure, we still need companies innovating and looking at how that 10 percent better care can have an extra 0 on the end and be 100% better care.

Plus, I think we’re seeing a shift in healthcare investment into a large number of smaller companies who can innovate as opposed to larger sums of money into medical device and biotech companies. In some ways we’re seeing the costs associated with a startup company in healthcare starting to come down the way they did in the IT side of things.

About the author

John Lynn

John Lynn

John Lynn is the Founder of the HealthcareScene.com, a network of leading Healthcare IT resources. The flagship blog, Healthcare IT Today, contains over 13,000 articles with over half of the articles written by John. These EMR and Healthcare IT related articles have been viewed over 20 million times.

John manages Healthcare IT Central, the leading career Health IT job board. He also organizes the first of its kind conference and community focused on healthcare marketing, Healthcare and IT Marketing Conference, and a healthcare IT conference, EXPO.health, focused on practical healthcare IT innovation. John is an advisor to multiple healthcare IT companies. John is highly involved in social media, and in addition to his blogs can be found on Twitter: @techguy.

2 Comments

  • Everyone wants to reduce the cost of healthcare and yet the push for EMRs is taken over by companies selling VERY EXPENSIVE systems for EMRs. It seems to me that many vendors want to get their portion of the incentive payments that are available. (My practice has lost a lot of money in the transition and I’ve never seen a dime. Don’t know if I ever will.) Why aren’t there grants or projects available for open-source EMRs that are designed by physicians to overcome the deficiencies of the current crop of EMR’s? I’d love to be part of any such think tank.

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